Is it a good time to buy properties now?

COVID-19 is messing up everyone’s livelihood and life right now, hence, is it a good time to buy properties now? Things are getting messy and everyone is worried as we don’t know how long this recession will continue. As Singapore government starts to tap on the reserves to help your local natives, as strange as it can be, now is the good time to buy properties.

So yes, it is a good time to buy properties now during this economy. Here are 4 reasons why you should buy now. It is currently a buyer’s market, properties are thriving in low-interest rates environment, technology makes things easier for buyers and statistics are in the buyer’s favor.

1. buyer’s Properties market

What do we mean by the buyer’s market? It just means that the buyers have a stronghold in the property transactions now. Therefore, developers will lower the price or give discounts during appropriate times. 8 St Thomas development was giving hefty discounts on their new project. This is where buyers should capitalize on the discounts as it adds to their capital appreciation.

2. low interest rate environment

Right now, due to COVID-19 and that the economy is not doing well, interest rates are at an all-time low right now. As of now, 1-month sibor rates are about 0.24%. You can check here for the latest SIBOR rates. As I mentioned in my previous post, interest rates make a hefty impact on your principal payment. Let’s say for a 2% interest rate, the monthly interest makes up approximately 45% of your monthly installment and for a 0.4% interest rate, it only takes up approximately 10% of your monthly installment. Therefore, during a low-interest rate environment, it is a good time to purchase a property as more of your monthly installment will be used to pay the principal. Here’s an example at exploring the mortgage on a million dollar home.

Besides housing loans, developers are also giving deferred payment packages. This means you can defer and pay your housing installments at a later period of time. Also for new properties, you actually only pay lesser installment upon getting the keys, as 85% of the loan is being dispersed. The rest of the loan will only be dispersed after CSC completion. This means you can get a higher rental yield as well!

3. Leveraging on technology

Buyers are currently spoiled for choice! Now house viewings can be conducted via video conferencing apps. Therefore, buyers have the opportunity to view more houses in their own comfort zone. Saving up on the time to travel, they can view more properties and decide which is the best house for them! Therefore, we can get more information at our fingertips!

4. Statistics in our favour!

Time the market to buy property
Real estate cycle from 2005 to 2017

From the above chart, you can see there every time there is a crisis, the prices of the property just shoot back north. The thing is, we cannot always be remaining at our house and not going out. Soon or later, the economy will go back to its original state and restaurants will be operating normally again, people will start travelling for holidays. Once the economy recovers, property prices will rise. Therefore, now it will be a good opportunity to grab some properties!

Of the 10,386 private property transactions, 2,658 units were resold over a five-year time horizon. A five-year timeframe was used because I wanted to assess the short-term profitability potential of residential units for that specific property cycle (before the Global Financial Crisis (GFC) happened).

Just some statistics that about 2,658 properties were resold between 2003 and 2008, and about 85.93% sold their units for profits, whilst only 14.07% were sold at a loss. This clearly shows there is a 86% of making money during the crisis!

conclusion – so is it a good time to buy properties now?

Honestly, now is a great time to purchase a house. However, it doesn’t mean its a good time that you have to overstretch yourself. In the end, the property market cannot be timed without first making sure that you are ready to purchase a property.

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